AI Structured Summary
Not yet generated for this judgment
Judgment
PER M. BALAGANESH, A. M.:
The appeal in ITA Nos.3911/Del/2018 and 3899/Del/2019 for AYs 2012-13 and 2015-16, arises out of the order of the ld. Commissioner of Income Tax (Appeals)-22, New Delhi and ld. Commissioner of Income Tax (Appeals)-35, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 28.02.2018 for AY 2012-13 and dated 27.02.2019 for AY 2015-16 against the order of assessment passed u/s 143(3) r.w.s. 144C of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 21.03.2016 and 21.12.2017 by the Assessing Officer, DCIT, Circle-10(1), New Delhi (hereinafter referred to as ‘ld. AO’). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.
These appeals were disposed of originally on 30.04.2024 in ITA No. 3911/Del/2018 and 3899/Del/2019 for AYs 2012-13 and 2015-16. Later these appeals were recalled in MA Nos. 230 and 231/Del/2024 dated 14.01.2026 respectively only for the limited purposes of adjudication of additional ground with regard to disallowance made on account of provision for expenses of Rs. 9,04,80,947/-.
During F.Y. 2011-12 (Α.Υ. 2012-13), the Assessee had incurred cost amounting to Rs. 9,04,80,947/- towards rejection of exports made to USA and Canada, which was charged to Profit & Loss A/c as an Exceptional Item. The Assessee had given a detailed note in this regard at Note No. 2.23 of the Audited Financial Statement for F.Y. 2011-12.
The Assessee claimed the same as deduction in its Return of Income filed for A.Y. 2012-13 on November 30, 2012. However, during the assessment proceedings for A.Y. 2012-13, in order to avoid any litigation on the said issue, the Assessee vide its submissions dated January 28, 2016 suo moto offered the same for disallowance.
The AO passed the assessment order for AY 2012-13 dated March 21, 2016 under section 143(3) r.w.s. 144C of the Act after making certain additions/deletions, however, inadvertently, had not made addition of aforesaid cost amounting to Rs. 9,04,80,947/-. Subsequently, the said mistake was rectified by the AO by passing order u/s. 154 r.w.s. 143(3) of the Act dated August 28, 2017.
Meanwhile, during F.Y. 2014-15 (A.Y. 2015-16), the Assessee had written back a total amount of Rs. 10,71,72,610/- (including the aforesaid amount of Rs. 9,04,80,947/-) incurred towards rejection of exports made to USA and Canada credited to Profit & Loss A/c as Exceptional Item. The Assessee had given a detailed note in this regard at Note No. 2.26 of the Audited Financial Statement for F.Y. 2014-15.
The Assessee has offered the entire amount of Rs. 10,71,72,610/-to tax in its Return of Income filed for A.Y. 2015-16 on November 28, 2015 which is clear from the fact that no deduction has been claimed for the same in the computation of income for the year.
The said treatment was under bona fide belief that the Assessee would be allowed the deduction of Rs. 9,04,80,947/- during the assessment proceedings for A.Y. 2012-13 that were pending at that point of time. However, as stated above, subsequently on January 28, 2016, in order to avoid any litigation on the said issue, during the assessment proceedings for A.Y. 2012-13, the Assessee vide its submissions dated January 28, 2016 suo moto offered the same for disallowance.
In view of the foregoing, the Assessee submits that the aforesaid amount of Rs. 9,04,80,947/- towards rejection of exports made to USA and Canada should either be allowed as deduction in A.Y. 2012-13 or should not be taxed in A.Y. 2015-16 after the same was written back. Accordingly, the Assessee has filed additional ground in both A.Y. 2012-13 and A.Y. 2015-16 to raise the said claim.
We hold that provision for expenses made in the sum of Rs. 9,04,80,947/- shall not be eligible for deduction in AY 2012-13. The ld AR submitted that the very same provision has been reversed by the assessee company voluntarily and offered to tax in AY 2015-16. Since, we have already held that the provision for expenses has been rightly disallowed for AY 2012-13 by the ld AO, then the same very provision on its reversal cannot be brought to tax again. Hence, in AY 2015-16, the same should be eligible for reduction from total income of the assessee. We direct the ld AO accordingly.
In the result, additional ground raised by the assessee for AY 2012-13 is dismissed and for AY 2015-16, it is allowed.
This order is to be read together with original tribunal order dated 30.04.2024 and MA order dated 14.01.2026.